"glitter" in the pan you see is most likely copper, from a bearing. It wont be magnetic of course, but if you SEE it in the pan, then that's not good. You have bearing wear, or damage.
This can be some of your problem...low oil pressure or contaminates in the oil can cause bearing damage. You might have toasted a rod bearing, and what you hear is rod knock, meaning the rod has excessive play on the crank, and as you rev. the engine the oil pressure goes up, and the tolerances decreased making the sound quiet down, or go away. When the RPM's go down, the oil pressure does too, and the tolerances increased and the knock comes back.
I think your probably due for either a rebuild if you stop driving it now, or a replacement if you keep on driving it. (replacement meaning engine failure)
~F~